Give at least three examples from economics where each of the following type of data can be used: cross-sectional data, time series data, and panel data
What will be an ideal response?
Answer: Answers will vary by student. At this level of economics, students most likely have heard of the following use of cross-sectional data: earnings functions, growth equations, the effect of class size reduction on student performance (in this chapter), demand functions (in this chapter: cigarette consumption); time series: the Phillips curve (in this chapter), consumption functions, Okun's law; panel data: various U.S. state panel studies on road fatalities (in this book), unemployment rate and unemployment benefits variations, growth regressions (across states and countries), and crime and abortion (Freakonomics).
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The rate at which units of one product can be exchanged for units of another product is called the terms of trade
Indicate whether the statement is true or false
Professor's economics students are constructing models for how gasoline prices change. Maria's model has very realistic assumptions and is quite complex. Anna's model is less complicated and less realistic
Maria's model correctly predicts gas price increases 5% of the time. Anna's model predicts correctly 15% of the time. On the basis of usefulness or "goodness," Professor will give which student's model the higher grade and why? A) Maria's model gets the higher grade because it is more complex. B) Anna's model gets the higher grade because it is simpler. C) Maria's model gets the higher grade because it is more realistic. D) Anna's model gets the higher grade because it predicts accurately more often.